River Manufacturing has been trying to understand their costs for the current period and to help them determine the budgeted unit cost for manufacturing for next year. The accountant has provided you with the following information for the past six months: Production in Month Cost Units July $49,011 22,200 August 58,750 26,400 September 85,245 40,500 October 76,400 31,000 November 62,500 29,000 December 86,851 39,800

a) Using the high-low method, determine the cost function for production cost for Fraser. [4 marks] b) Using regression analysis, determine the cost function for production cost for Fraser. (See Regression output below) [2 marks] c) If they were expecting to produce 27,500 units in January, what would the estimated cost be under each method (high/low and regression)? Which would you recommend Fraser use? Why? Are there any other considerations you would make in determining the estimated cost for January? [3 marks]